Board of Accountancy Resolution 36-2019 was issued on July 18, 2019 to repeal BOA Resolution 3-2019 and other related resolutions relating to revolutionary compilation services requirements for the preparation of financial statements and financial statements. related notes by the certified public. Accountants (CPA). As discussed in last week’s column, several reasons were cited for the removal of Build Services Resolutions.
I say that these reasons are dubious to say the least. I know that many CPA practitioners and stakeholders consider the measurement of compilation services to be reasonable and that it has had positive results for the accounting and business community. In accounting and auditing practice, many CPAs have moved away from external auditing services to focus on providing compilation services. They perceive the latter as less risky and less demanding in the exercise of their profession.
Also, why the requirement for compilation services was against Republic Act 11032 on the Ease of Doing Business is overstated because there are rules and requirements from other government agencies, including the SEC. and the BIR, which impose stricter and more burdensome requirements on companies, while compilation services do not impose an expensive toll on the companies concerned. Most of the provisions of BOA Resolution 3-2016 have long been in place even before the enhancement of RA 11032 and have long been part of industry practice in the preparation of their financial statements.
Obviously, the reasons cited in BOA Resolution 36-2019 for the repeal of the Compilation Services Resolutions were unconvincing and questionable as to the actual intent.
What could have been the reason for the turbulence that arose with a commendable initiative like BOA Resolution 3-2016? Without any research or investigation into this matter, the reasons behind the issues are left to speculation. In his article titled “The Need for Compilation Services Certification” which was published in BusinessMirror in 2017 (https://businessmirror.com.ph/2017/10/16/the-need-for-certification-of-compilation-services/), Mr. Alfredo Non, former Commissioner of the Energy Regulatory Commission and CPA, analyzed the measurement of compilation services and gave the reasons for the opposition of certain people and organizations to the measurement of compilation services. Quotes from his articles are his observations as to possible reasons:
Will it cause a gap in a niche of work currently being done by some internal auditors that must now be done by others?
CPAs who used to do this without needing to be certified will now have to comply?
Has their thinking been influenced by others with special interests?
There’s a leadership problem… Using Resolve as a reason?
They refuse to understand, or just don’t understand?
I agree with the points raised by Mr. No. To supplement them, I add the following further reasons for political infighting over territory between government agencies; the perception by certain key players in the external audit industry that the compilation services measure would cause disruptions in the business model and pricing of their services; the tendency of new leaders to abandon the initiatives of the administration they replaced and institute their own programs if they exist; and, the lack of appreciation by other government regulators of the beneficial effects of the measure.
Is it the disappearance of the revolutionary and innovative measure on compilation services? I hope not. If relevant stakeholders, both CPA and non-CPA, begin to voice their advocacy and support for the compilation service measure, reviving this innovation may be possible. A cost-benefit assessment study of this business can provide a basis for reactivation. An impartial dialogue between the stakeholders of the practice and government regulators can be conducted to deepen the issues of this measure. With these, all the benefits of this compilation service can be recognized and ultimately realized for the benefit of the accounting profession and related government regulation on corporate financial reporting.
Joel L. Tan-Torres is Dean of the Virata School of Business at the University of the Philippines. Previously, he was Commissioner of the Bureau of Internal Revenue, Chairman of the Professional Regulatory Board of Accountancy, and Partner of Reyes Tacandong & Co. and SyCip Gorres and Velayo & Co. He is a Certified Public Accountant who earned #1 at the May 1979 CPA board review.
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